New Jersey Tax Court Holds State May Not Tax International Corporation's Foreign-Source Income

New Jersey Tax Court Holds State May Not Tax International Corporation's Foreign-Source Income

Tax Court of New Jersey

The New Jersey Tax Court held that the state may not impose corporate business tax on a foreign corporation's foreign-source income, which is not subject to federal income tax, adopting the interpretation of state statutes in International Business Machines Corp. v. Director, Division of Taxation that found the legislature's intent was to couple a corporation's entire net income to federal taxable income.

The New Jersey Tax Court held that the state may not impose corporate business tax on a foreign corporation's foreign-source income, which is not subject to federal income tax, adopting the interpretation of state statutes in International Business Machines Corp. v. Director, Division of Taxation that found the legislature's intent was to couple a corporation's entire net income to federal taxable income.

The New Jersey Tax Court held that the state may not impose corporate business tax on a foreign corporation's foreign-source income, which is not subject to federal income tax, adopting the interpretation of state statutes in <a href="/lr/resolve/source-document/2xn3" target="_blank" title="Source document">International Business Machines Corp. v. Director, Division of Taxation</a> that found the legislature's intent was to couple a corporation's entire net income to federal taxable income. The court ordered the tax division to refund the taxpayer $5.8 million, plus interest.

The New Jersey Tax Court held that the state may not impose corporate business tax on a foreign corporation's foreign-source income, which is not subject to federal income tax, adopting the interpretation of state statutes in International Business Machines Corp. v. Director, Division of Taxation that found the legislature's intent was to couple a corporation's entire net income to federal taxable income. The court ordered the tax division to refund the taxpayer $5.8 million, plus interest.